HEALTH CARE CHANGES

HB0143

HOUSE BILL 143

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Jenifer Jones
and
Nicole Chavez
and
Elaine Sena Cortez

and
Alan T. Martinez
and
Luis M. Terrazas

AN ACT

RELATING TO HEALTH CARE; INCREASING THE RURAL HEALTH CARE
PRACTITIONER TAX CREDIT; CREATING THE PHYSICIAN INCOME TAX
CREDIT; EXPANDING THE RURAL HEALTH CARE PRACTITIONER TAX CREDIT
TO INCLUDE ADDITIONAL ELIGIBLE HEALTH CARE PRACTITIONERS;
ENACTING THE MEDICAL RESIDENCY LOAN REPAYMENT ACT; GRANTING
LOAN REPAYMENT AWARDS TO CERTAIN MEDICAL RESIDENTS AND MEDICAL
FELLOWS; PROVIDING FOR CONTRACTS, CONTRACT CANCELLATIONS AND
CONTRACT ENFORCEMENT; CREATING A FUND; AMENDING DEFINITIONS IN
THE MEDICAL MALPRACTICE ACT; LIMITING THE AMOUNT OF DAMAGES
THAT CAN BE AWARDED DUE TO A MEDICAL MALPRACTICE CLAIM;
REQUIRING PAYMENTS FROM THE PATIENT'S COMPENSATION FUND TO BE
MADE AS EXPENSES ARE INCURRED; LIMITING THE AVAILABILITY OF
PUNITIVE DAMAGES IN MEDICAL MALPRACTICE CLAIMS; LIMITING
ATTORNEY FEES IN MALPRACTICE CLAIMS; REQUIRING THE HEALTH CARE
AUTHORITY TO CONDUCT COST STUDIES FOR EACH TYPE OF HEALTH CARE
PROVIDER THAT IS REIMBURSED BY MEDICAID; MAKING AN
APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 7-2-18.22 NMSA 1978 (being Laws 2007,
Chapter 361, Section 2, as amended) is amended to read:

"7-2-18.22. RURAL HEALTH CARE PRACTITIONER TAX CREDIT.--

A. A taxpayer who files an individual New Mexico
tax return, who is not a dependent of another individual, who
is an eligible health care practitioner and who has provided
health care services in New Mexico in a rural health care
underserved area in a taxable year may claim a credit against
the tax liability imposed by the Income Tax Act. The credit
provided in this section may be referred to as the "rural
health care practitioner tax credit".

B. The rural health care practitioner tax credit
may be claimed and allowed in an amount that shall not exceed:

(1) [
five thousand dollars ($5,000)
]
fifteen
thousand dollars ($15,000)
for all physicians, osteopathic
physicians, dentists, psychologists, podiatric physicians and
optometrists who qualify pursuant to the provisions of this
section and have provided health care during a taxable year for
at least one thousand five hundred eighty-four hours at a
practice site located in an approved rural health care
underserved area. Eligible health care practitioners listed in
this paragraph who provided health care services for at least
seven hundred ninety-two hours but less than one thousand five
hundred eighty-four hours at a practice site located in an
approved rural health care underserved area during a taxable
year are eligible for one-half of the tax credit amount; and

(2) [
three thousand dollars ($3,000)
]
nine
thousand dollars ($9,000)
for all pharmacists, dental
hygienists, physician assistants, certified registered nurse
anesthetists, certified nurse practitioners, clinical nurse
specialists, registered nurses, midwives, licensed clinical
social workers, licensed independent social workers,
professional mental health counselors, professional clinical
mental health counselors, marriage and family therapists,
professional art therapists, alcohol and drug abuse counselors,

licensed practical nurses, emergency medical technicians,
paramedics, speech-language pathologists, occupational
therapists, chiropractic physicians
and physical therapists who
qualify pursuant to the provisions of this section and have
provided health care during a taxable year for at least one
thousand five hundred eighty-four hours at a practice site
located in an approved rural health care underserved area.
Eligible health care practitioners listed in this paragraph who
provided health care services for at least seven hundred
ninety-two hours but less than one thousand five hundred
eighty-four hours at a practice site located in an approved
rural health care underserved area during a taxable year are
eligible for one-half of the tax credit amount.

C. Before an eligible health care practitioner may
claim the rural health care practitioner tax credit, the
practitioner shall submit a completed application to the
department of health that describes the practitioner's clinical
practice and contains additional information that the
department of health may require. The department of health
shall determine whether an eligible health care practitioner
qualifies for the rural health care practitioner tax credit and
shall issue a certificate to each qualifying eligible health
care practitioner. The department of health shall provide the
taxation and revenue department appropriate information for all
eligible health care practitioners to whom certificates are
issued in a secure manner on regular intervals agreed upon by
both the taxation and revenue department and the department of
health.

D. A taxpayer claiming the credit provided by this
section shall submit a copy of the certificate issued by the
department of health with the taxpayer's New Mexico income tax
return for the taxable year. If the amount of the credit
claimed exceeds a taxpayer's tax liability for the taxable year
in which the credit is being claimed, the excess may be carried
forward for three consecutive taxable years.

E. A taxpayer allowed a tax credit pursuant to this
section shall claim the credit on forms and in a manner
required by the department.

F. The tax credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
tax credit.

G. As used in this section:

(1) "eligible health care practitioner" means:

(a) a dentist or dental hygienist
licensed pursuant to the Dental Health Care Act;

(b) a midwife that is a: 1) certified
nurse-midwife licensed by the board of nursing as a registered
nurse and licensed by the public health division of the
department of health to practice nurse-midwifery as a certified
nurse-midwife; or 2) licensed midwife licensed by the public
health division of the department of health to practice
licensed midwifery;

(c) an optometrist licensed pursuant to
the provisions of the Optometry Act;

(d) an osteopathic physician licensed
pursuant to the provisions of the Medical Practice Act;

(e) a physician licensed pursuant to the
provisions of the Medical Practice Act or a physician assistant
licensed pursuant to the provisions of the Physician Assistant
Act;

(f) a podiatric physician licensed
pursuant to the provisions of the Podiatry Act;

(g) a psychologist licensed pursuant to
the provisions of the Professional Psychologist Act;

(h) a registered nurse licensed pursuant
to the provisions of the Nursing Practice Act;

(i) a pharmacist licensed pursuant to
the provisions of the Pharmacy Act;

(j) a licensed clinical social worker or
a licensed independent social worker licensed pursuant to the
provisions of the Social Work Practice Act;

(k) a professional mental health
counselor, a professional clinical mental health counselor, a
marriage and family therapist, an alcohol and drug abuse
counselor or a professional art therapist licensed pursuant to
the provisions of the Counseling and Therapy Practice Act;
[
and
]

(l) a physical therapist licensed
pursuant to the provisions of the Physical Therapy Act;

(m) an emergency medical technician or a
paramedic licensed pursuant to the Emergency Medical Services
Act;

(n) a speech-language pathologist
licensed pursuant to the Speech-Language Pathology, Audiology
and Hearing Aid Dispensing Practices Act;

(o) an occupational therapist licensed
pursuant to the Occupational Therapy Act; and

(p) a chiropractic physician licensed
pursuant to the Chiropractic Physician Practice Act;

(2) "health care underserved area" means a
geographic area or practice location in which it has been
determined by the department of health, through the use of
indices and other standards set by the department of health,
that sufficient health care services are not being provided;

(3) "practice site" means a private practice,
public health clinic, hospital, public or private nonprofit
primary care clinic or other health care service location in a
health care underserved area; and

(4) "rural" means a rural county or an
unincorporated area of a partially rural county, as designated
by the health resources and services administration of the
United States department of health and human services."

SECTION 2.
A new section of the Income Tax Act is enacted
to read:

"[
NEW MATERIAL
] CREDIT--PHYSICIAN INCOME TAX CREDIT.--

A. A taxpayer who is a physician and has completed
a medical residency may claim a credit against the taxpayer's
tax liability imposed pursuant to the Income Tax Act for up to
five consecutive taxable years in which the taxpayer practices
medicine full-time in New Mexico and has an outstanding balance
of a student loan taken to defray the expenses of a medical
education. The credit authorized pursuant to this section may
be referred to as the "physician income tax credit".

B. The amount of the tax credit shall be in an
amount equal to fifty thousand dollars ($50,000) for the
taxable year the taxpayer meets the requirements of this
section.

C. A taxpayer shall apply for certification of
eligibility for the tax credit from the higher education
department on forms and in the manner prescribed by that
department. If the higher education department determines that
the taxpayer meets the requirements of this section, that
department shall issue a dated certificate of eligibility to
the taxpayer providing the amount of tax credit for which the
taxpayer is eligible and the taxable years in which the credit
may be claimed. The higher education department shall provide
the department with the certificates of eligibility issued
pursuant to this subsection in an electronic format at
regularly agreed upon intervals.

D. That portion of the tax credit that exceeds a
taxpayer's income tax liability in the taxable year in which
the credit is claimed shall be refunded to the taxpayer.

E. A taxpayer allowed to claim a tax credit
pursuant to this section shall claim the tax credit in a manner
required by the department. The credit shall be claimed within
three taxable years of the end of the year in which the higher
education department certifies the credit.

F. The credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
credit.

G. As used in this section:

(1) "physician" means a physician licensed
pursuant to the provisions of the Medical Practice Act, an
osteopathic physician licensed pursuant to the provisions of
the Medical Practice Act or a dentist licensed pursuant to the
Dental Health Care Act; and

(2) "practices medicine full-time" means
providing health care within the scope of a physician's
practice for at least one thousand five hundred eighty-four
hours during the taxable year."

SECTION 3.
A new section of Chapter 21 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] SHORT TITLE.--Sections 3 through 9 of this
act may be cited as the "Medical Residency Loan Repayment
Act"."

SECTION 4.
A new section of Chapter 21 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] DEFINITIONS.--As used in the Medical
Residency Loan Repayment Act:

A. "applicant" means a person applying for an
award;

B. "award" means the grant of money pursuant to the
Medical Residency Loan Repayment Act to repay loans;

C. "department" means the higher education
department;

D. "fund" means the medical residency loan
repayment fund;

E. "loan" means a grant of money pursuant to a
contract between a medical resident or a medical fellow and the
federal government, the state government or a commercial lender
to defray the costs incidental to an undergraduate or medical
education and that requires either repayment of principal and
interest or repayment in services;

F. "medical fellow" means an individual who has
completed a medical fellowship in an institution of higher
education in New Mexico; and

G. "medical resident" means an individual who has
completed a medical residency in an institution of higher
education in New Mexico."

SECTION 5.
A new section of Chapter 21 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] POWERS AND DUTIES.--The department may:

A. grant an award to repay loans obtained for

undergraduate education and medical training obtained by a
medical resident or medical fellow upon such terms and
conditions as may be imposed by rule of the department; and

B. delegate to other agencies or contract for the

performance of services required by the medical residency loan
repayment program."

SECTION 6.
A new section of Chapter 21 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] AWARDS--CRITERIA--CONTRACT TERMS.--

A. An applicant shall have completed a medical
residency or medical fellowship before applying for an award
and agreed to work as a physician in New Mexico for five
consecutive years upon receiving an award.

B. Prior to receiving an award, a medical resident
or medical fellow shall file an application with the department
that meets the criteria established by rule of the department.

C. An award recipient shall certify on at least an

annual basis the recipient's continued employment as a
physician practicing medicine in New Mexico.

D. The following debts are not eligible for
repayment pursuant to the Medical Residency Loan Repayment Act:

(1) amounts incurred as a result of
participation in state loan-for-service programs or other
state programs the purposes of which state that service be
provided in exchange for financial assistance;

(2) scholarships that have a service component
or obligation;

(3) personal loans from friends or relatives;

(4) loans that exceed individual standard
school expense levels; and

(5) loans that are eligible for another state
or federal loan repayment program.

E. Award criteria shall provide that:

(1) the applicant shall have graduated from a
medical school accredited by the liaison committee on medical
education or the commission on osteopathic college
accreditation;

(2) the applicant shall be licensed to
practice in New Mexico as a licensed physician;

(3) award amounts may be modified based on
available funding or other special circumstances; and

(4) an award for an approved applicant shall
be in an annual amount to repay the applicant's loan
indebtedness within three years.

F. Every loan repayment award shall be evidenced by
a contract between the medical resident or medical fellow and
the department on behalf of the state. The contract shall
provide for the payment by the state of a stated sum to the
medical resident's or medical fellow's federal government
lender, state government lender or commercial lender and shall
state the obligations of the medical resident or medical fellow
under the medical residency loan repayment program as
established by the department.

G. A contract between a medical resident or medical
fellow and the department shall provide that if the medical
resident or medical fellow does not comply with the terms of
the contract, the medical resident or medical fellow shall
reimburse the department for all loan payments made on the
medical resident's or medical fellow's behalf plus

reasonable interest at a rate to be determined by the

department unless the department finds acceptable extenuating

circumstances for why the medical resident or medical fellow
cannot serve or comply with the terms of the contract. All
money reimbursed to the department pursuant to this subsection
shall be transferred to the fund.

H. Awards from the fund shall be made to the
federal government lender, state government lender or
commercial lender for a medical resident or medical fellow who
has received an award and shall be considered a payment on
behalf of the medical resident or medical fellow pursuant to
the contract between the department and the medical resident or
medical fellow. An award shall not obligate the state or the
department to a medical resident's or medical fellow's lender
for any other payment and shall not be considered to create any
privity of contract between the state or the department and the
lender.

I. The department shall adopt rules to implement
the provisions of the Medical Residency Loan Repayment Act.
The rules:

(1) shall provide a procedure for determining

the amount of the loan that will be repaid; and

(2) may provide for the disbursement of awards
to the lender in annual or other periodic installments."

SECTION 7.
A new section of Chapter 21 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] CONTRACTS--ENFORCEMENT--CANCELLATION.--

A. The general form of a contract required pursuant
to the Medical Residency Loan Repayment Act shall be

prepared and approved by the department's general counsel, and
each contract shall be signed by the medical resident or
medical fellow and the secretary of higher education or the
secretary's authorized representative on behalf of the state.
The department is vested with full and complete authority and
power to sue in its own name for any balance due to the state
from a medical resident or medical fellow under a loan
repayment contract.

B. The department may cancel a contract made
between the department and a medical resident or medical fellow
pursuant to the Medical Residency Loan Repayment Act for any
reasonable cause deemed sufficient by the department."

SECTION 8.
A new section of Chapter 21 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] MEDICAL RESIDENCY LOAN REPAYMENT FUND
CREATED.--The "medical residency loan repayment fund" is
created as a nonreverting fund in the state treasury. The fund
consists of appropriations, repayment of awards and interest
received by the department, income from investment of the fund,
gifts, grants and donations. The fund shall be administered by
the department, and money in the fund is appropriated to the
department to make awards pursuant to the Medical Residency
Loan Repayment Act. Expenditures from the fund shall be made
on warrants of the secretary of finance and administration
pursuant to vouchers signed by the secretary of higher
education or the secretary's authorized representative."

SECTION 9.
A new section of Chapter 21 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] REPORTS.--On or before December 1 of each
year, the department shall submit a report to the governor and
the legislative finance committee of the department's
activities, the awards granted and the job title and duties of
each loan recipient. The report shall also include any
contract cancellations and enforcement actions the department
has taken."

SECTION 10.
A new section of the Public Assistance Act is
enacted to read:

"[
NEW MATERIAL
] COST STUDIES REQUIRED.--

A. At least every three years, the authority shall
conduct cost studies for the purposes of determining the cost
of providing health care services for each type of health care
provider that is reimbursed by medicaid for providing services
to recipients. The cost studies shall include recommendations
for adequate reimbursement rates for each type of health care
provider reimbursed by medicaid based on:

(1) the cost to provide competitive
compensation to health care providers; and

(2) recent and projected changes in costs due
to factors that include inflation and rising wages.

B. When the authority submits a budget request to
the legislature, the authority shall include the most recent
cost study performed for each type of health care provider that
is reimbursed by medicaid.

C. The authority shall not be required to perform
cost studies for every type of health care provider that is
reimbursed by medicaid in the same year, so long as a cost
study is conducted for each type of health care provider at
least every three years.

D. For the purposes of this section, "medicaid"
means the federal-state program administered by the authority
pursuant to Title 19 or Title 21 of the federal Social Security
Act."

SECTION 11.
Section 41-5-3 NMSA 1978 (being Laws 1976,
Chapter 2, Section 3, as amended) is amended to read:

"41-5-3. DEFINITIONS.--As used in the Medical Malpractice
Act:

A. "advisory board" means the patient's
compensation fund advisory board;

B. "control" means equity ownership in a business
entity that:

(1) represents more than fifty percent of the
total voting power of the business entity; or

(2) has a value of more than fifty percent of
that business entity;

C. "fund" means the patient's compensation fund;

D. "health care provider" means a person,
a

corporation,
an
organization,
a
facility or
an
institution
licensed or certified by this state to provide health care or
professional services as a doctor of medicine,
a
hospital,
an

outpatient health care facility,
a
doctor of osteopathy,
a

chiropractor, [
podiatrist
]
a podiatric physician, a
nurse
anesthetist,
a
physician's assistant,
a
certified nurse
practitioner,
a
clinical nurse specialist or
a
certified nurse-midwife or a business entity that is organized, incorporated or
formed pursuant to the laws of New Mexico that provides health
care services primarily through natural persons identified in
this subsection. "Health care provider" does not mean a person
or
an
entity protected pursuant to the Tort Claims Act or the
Federal Tort Claims Act;

E. "hospital" means a facility licensed as a
hospital in this state that offers [
in-patient
]
inpatient

services, nursing or overnight care on a twenty-four-hour basis
for diagnosing, treating and providing medical, psychological
or surgical care for three or more separate persons who have a
physical or mental illness, disease, injury or rehabilitative
condition or are pregnant and may offer emergency services.
"Hospital" includes a hospital's parent corporation, subsidiary
corporations or affiliates if incorporated or registered in New
Mexico; employees and locum tenens providing services at the
hospital; and agency nurses providing services at the hospital.
"Hospital" does not mean a person or
an
entity protected
pursuant to the Tort Claims Act or the Federal Tort Claims Act;

F. "independent outpatient health care facility"
means a health care facility that is an ambulatory surgical
center,
an
urgent care facility or
a
free-standing emergency
room that is not, directly or indirectly through one or more
intermediaries, controlled or under common control with a
hospital. "Independent outpatient health care facility"
includes a facility's employees, locum tenens providers and
agency nurses providing services at the facility. "Independent
outpatient health care facility" does not mean a person or
an

entity protected pursuant to the Tort Claims Act or the Federal
Tort Claims Act;

G. "independent provider" means a doctor of
medicine, doctor of osteopathy, chiropractor, [
podiatrist
]

podiatric physician
, nurse anesthetist, physician's assistant,
certified nurse practitioner, clinical nurse specialist or
certified nurse-midwife who is not an employee of a hospital or
outpatient health care facility. "Independent provider" does
not mean a person or
an
entity protected pursuant to the Tort
Claims Act or the Federal Tort Claims Act. "Independent
provider" includes:

(1) a health care facility that is:

(a) licensed pursuant to the [
Public
Health Act
]
Health Care Code
as an outpatient facility;

(b) not an ambulatory surgical center,

an
urgent care facility or
a
free-standing emergency room; and

(c) not hospital-controlled; and

(2) a business entity that is not a hospital
or outpatient health care facility that employs or consists of
members who are licensed or certified as doctors of medicine,
doctors of osteopathy, chiropractors, [
podiatrists
]
podiatric
physicians
, nurse anesthetists, physician's assistants,
certified nurse practitioners, clinical nurse specialists or
certified nurse-midwives and the business entity's employees;

H. "insurer" means an insurance company engaged in
writing health care provider malpractice liability insurance in
this state;

I. "malpractice claim" includes any cause of action
arising in this state against a health care provider for
medical treatment, lack of medical treatment or other claimed
departure from accepted standards of health care that
proximately results in injury to the patient, whether the
patient's claim or cause of action sounds in tort or contract,
and includes but is not limited to actions based on battery or
wrongful death; "malpractice claim" does not include a cause of
action arising out of the driving, flying or nonmedical acts
involved in the operation, use or maintenance of a vehicular or
aircraft ambulance;

J. "medical care and related benefits" means all
reasonable medical, surgical, physical rehabilitation and
custodial services and includes drugs, prosthetic devices and
other similar materials reasonably necessary in the provision
of such services;

K. "occurrence" means all [
injuries to a patient
caused by health care providers' successive acts or omissions
that combined concurrently to create a malpractice claim
]

claims for damages from all persons arising from harm to a
single patient, no matter how many health care providers,
errors or omissions contributed to the harm
;

L. "outpatient health care facility" means an
entity that is hospital-controlled and is licensed pursuant to
the [
Public Health Act
]
Health Care Code
as an outpatient
facility, including ambulatory surgical centers, free-standing
emergency rooms, urgent care clinics, acute care centers and
intermediate care facilities and includes a facility's
employees, locum tenens providers and agency nurses providing
services at the facility. "Outpatient health care facility"
does not include:

(1) independent providers;

(2) independent outpatient health care
facilities; or

(3) individuals or entities protected pursuant
to the Tort Claims Act or the Federal Tort Claims Act;

M. "patient" means a natural person who received or
should have received health care from a health care provider,
under a contract, express or implied; and

N. "superintendent" means the superintendent of
insurance."

SECTION 12.
Section 41-5-6 NMSA 1978 (being Laws 1992,
Chapter 33, Section 4, as amended) is amended to read:

"41-5-6. LIMITATION OF RECOVERY.--

A. Except for punitive damages and past and future
medical care and related benefits, the aggregate dollar amount
recoverable by all persons for or arising from any injury or
death to a patient as a result of malpractice shall not exceed
six hundred thousand dollars ($600,000) per occurrence. [
for
malpractice claims brought against health care providers if the
injury or death occurred prior to January 1, 2022. In jury
cases, the jury shall not be given any instructions dealing
with this limitation.

B. Except for punitive damages and past and future
medical care and related benefits, the aggregate dollar amount
recoverable by all persons for or arising from any injury or
death to a patient as a result of malpractice shall not exceed
seven hundred fifty thousand dollars ($750,000) per occurrence
for malpractice claims against independent providers; provided
that, beginning January 1, 2023, the per occurrence limit on
recovery shall be adjusted annually by the consumer price index
for all urban consumers.

C. The aggregate dollar amount recoverable by all
persons for or arising from any injury or death to a patient as
a result of malpractice, except for punitive damages and past
and future medical care and related benefits, shall not exceed
seven hundred fifty thousand dollars ($750,000) for claims
brought against an independent outpatient health care facility
for an injury or death that occurred in calendar years 2022 and
2023.

D. In calendar year 2024 and subsequent years, the
aggregate dollar amount recoverable by all persons for or
arising from an injury or death to a patient as a result of
malpractice, except for punitive damages and past and future
medical care and related benefits, shall not exceed the
following amounts for claims brought against an independent
outpatient health care facility:

(1) for an injury or death that occurred in
calendar year 2024, one million dollars ($1,000,000) per
occurrence; and

(2) for an injury or death that occurred in
calendar year 2025 and thereafter, the amount provided in
Paragraph (1) of this subsection, adjusted annually by the
prior three-year average consumer price index for all urban
consumers, per occurrence.

E. In calendar year 2022 and subsequent calendar
years, the aggregate dollar amount recoverable by all persons
for or arising from any injury or death to a patient as a
result of malpractice, except for punitive damages and past and
future medical care and related benefits, shall not exceed the
following amounts for claims brought against a hospital or a
hospital-controlled outpatient health care facility:

(1) for an injury or death that occurred in
calendar year 2022, four million dollars ($4,000,000) per
occurrence;

(2) for an injury or death that occurred in
calendar year 2023, four million five hundred thousand dollars
($4,500,000) per occurrence;

(3) for an injury or death that occurred in
calendar year 2024, five million dollars ($5,000,000) per
occurrence;

(4) for an injury or death that occurred in
calendar year 2025, five million five hundred thousand dollars
($5,500,000) per occurrence;

(5) for an injury or death that occurred in
calendar year 2026, six million dollars ($6,000,000) per
occurrence; and

(6) for an injury or death that occurred in
calendar year 2027 and each calendar year thereafter, the
amount provided in Paragraph (5) of this subsection, adjusted
annually by the consumer price index for all urban consumers,
per occurrence.

F. The aggregate dollar amounts provided in
Subsections B through E of this section include payment to any
person for any number of loss of consortium claims or other
claims per occurrence that arise solely because of the injuries
or death of the patient.

G.
]
B.
In jury cases, the jury shall not be given
any instructions dealing with the limitations provided in this
section.

[
H.
]
C. Except as provided in Section 41-5-7 NMSA
1978
, the value of accrued medical care and related benefits
shall not be subject to any limitation.

[
I. Except for an independent outpatient health
care facility
]
D.
A health care provider's personal liability
is limited to [
two hundred fifty thousand dollars ($250,000)
]

two hundred thousand dollars ($200,000)
for monetary damages
and medical care and related benefits as provided in Section
41-5-7 NMSA 1978. Any amount due from a judgment or settlement
in excess of [
two hundred fifty thousand dollars ($250,000)
]

two hundred thousand dollars ($200,000)
shall be paid from the
fund [
except as provided in Subsections J and K of this
section.

J. An independent outpatient health care facility's
personal liability is limited to five hundred thousand dollars
($500,000) for monetary damages and medical care and related
benefits as provided in Section 41-5-7 NMSA 1978. Any amount
due from a judgment or settlement in excess of five hundred
thousand dollars ($500,000) shall be paid from the fund.

K. Until January 1, 2027, amounts due from a
judgment or settlement against a hospital or hospital-controlled outpatient health care facility in excess of seven
hundred fifty thousand dollars ($750,000), excluding past and
future medical expenses, shall be paid by the hospital or
hospital-controlled outpatient health care facility and not by
the fund. Beginning January 1, 2027, amounts due from a
judgment or settlement against a hospital or hospital-controlled outpatient health care facility shall not be paid
from the fund.

L. The term "occurrence" shall not be construed in
such a way as to limit recovery to only one maximum statutory
payment if separate acts or omissions cause additional or
enhanced injury or harm as a result of the separate acts or
omissions. A patient who suffers two or more distinct injuries
as a result of two or more different acts or omissions that
occur at different times by one or more health care providers
is entitled to up to the maximum statutory recovery for each
injury
]."

SECTION 13.
Section 41-5-7 NMSA 1978 (being Laws 1992,
Chapter 33, Section 5, as amended) is amended to read:

"41-5-7. MEDICAL EXPENSES AND PUNITIVE DAMAGES.--

A. Awards of past and future medical care and
related benefits shall not be subject to the limitations of
recovery imposed in Section 41-5-6 NMSA 1978.

B. The health care provider shall be liable for all
medical care and related benefit payments until the total
payments made by or on behalf of it for monetary damages and
medical care and related benefits combined equals the health
care provider's personal liability limit as provided in
Subsection [
I
]
D
of Section 41-5-6 NMSA 1978, after which the
payments shall be made by the fund.

C. [
Beginning January 1, 2027, any amounts due from
a judgment or settlement against a hospital or outpatient
health care facility shall not be paid from the fund if the
injury or death occurred after December 31, 2026
]
Payments made
from the fund for medical care and related benefits shall be
made as expenses are incurred
.

D. This section shall not be construed to prevent a
patient and a health care provider from entering into a
settlement agreement whereby medical care and related benefits
shall be provided for a limited period of time only or to a
limited degree.

E. A judgment of punitive damages against a health
care provider shall be the personal liability of the health
care provider.
Punitive damages may only be awarded if the
prevailing party demonstrates beyond a reasonable doubt that
the health care provider acted with malice, willful intent to
harm or wanton disregard for the rights or safety of others.

Punitive damages shall not be paid from the fund or from the
proceeds of the health care provider's insurance contract
unless the contract expressly provides coverage. Nothing in
Section 41-5-6 NMSA 1978 precludes the award of punitive
damages to a patient. Nothing in this subsection authorizes
the imposition of liability for punitive damages where that
imposition would not be otherwise authorized by law.

F. A punitive damage award against:

(1) a hospital or a hospital-controlled
outpatient health care facility shall not be in an amount that
exceeds three times the applicable limitation on compensatory
damages provided in Section 41-5-6 NMSA 1978; or

(2) any other health care provider shall not
be in an amount that exceeds the applicable limitation on
compensatory damages provided in Section 41-5-6 NMSA 1978.
"

SECTION 14.
A new section of the Medical Malpractice Act
is enacted to read:

"[
NEW MATERIAL
] LIMITING ATTORNEY FEES.--

A. An attorney shall not contract for or collect a
contingency fee for representing a person seeking damages in a
malpractice claim in an amount that exceeds:

(1) thirty percent of the first two hundred
fifty thousand dollars ($250,000) recovered pursuant to a
settlement agreement, an arbitration award or a judgment;

(2) twenty-five percent of the portion
recovered pursuant to a settlement agreement, an arbitration
award or a judgment that is more than two hundred fifty
thousand dollars ($250,000) but not more than five hundred
thousand dollars ($500,000) in value;

(3) twenty percent of the portion recovered
pursuant to a settlement agreement, an arbitration award or a
judgment that is more than five hundred thousand dollars
($500,000) but not more than one million dollars ($1,000,000)
in value; and

(4) fifteen percent of the portion recovered
pursuant to a settlement agreement, an arbitration award or a
judgment that is more than one million dollars ($1,000,000) in
value.

B. Any amount recovered pursuant to a settlement
agreement, an arbitration award or a judgment for a malpractice
claim that is covered by the fund shall not contribute to an
attorney's contingency fee."

SECTION 15.
APPROPRIATION.--Three million dollars
($3,000,000) is appropriated from the general fund to the
medical residency loan repayment fund for expenditure in fiscal
year 2027 and subsequent fiscal years for the purposes of the
medical residency loan repayment fund. Any unexpended balance
remaining at the end of a fiscal year shall not revert to the
general fund.

SECTION 16.
APPLICABILITY.--

A. The provisions of Sections 1 and 2 of this act
apply to taxable years beginning on or after January 1, 2026.

B. The provisions of Sections 11 through 14 of this
act apply to all claims for medical malpractice that arise on
or after the effective date of this act.

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